‘Crop and motor insurance to drive general insurance sector’s growth’

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Chennai, Aug 1 (IANS) Crop and motor insurance are expected to drive the Indian non-life sectors growth by 20 per cent this fiscal, said a senior official at ICRA Ltd on Tuesday.

The public sector players have seen a sharp fall in their solvency indicators on the back of rise in claims and changes in actuarial estimates with two of the players reporting solvency levels below the regulatory minimum during the year, said Karthik Srinivasan, Senior Vice-President and Group Head Financial Sector Ratings, ICRA.

“We expect the growth rates to remain strong at around 20 per cent in FY2018 driven by crop, motor and health businesses,” he said.

Presenting the performance of the general insurance sector at a webinar, Srinivasan added the central government’s initiatives aimed at improving the penetration and density levels coupled with the industry’s ability to leverage technology and reach is likely to facilitate higher business volumes over the medium to long term.

He said last fiscal, crop insurance was the fastest growing segment for the entire industry.

The segment grew by 6.5 times and had a 12 per cent market share in FY2017 vis-a-vis two per cent in FY2016, Srinivasan added.

“With the Government keen to increase the acreage under insurance, crop insurance segment is expected to grow in the current year as well albeit at lower pace as the availability of reinsurance capacity would be a key requirement,” he said.

According to him health and personal accident grew at 4.2 per cent in FY17 and are likely to grow at fast pace given the increased retail focus of the players. The corporate segments continued to record low growth and only a pickup in the investment cycle would reverse the trend.

ICRA has released its study on the general insurance sector in the country analysing the performance of 14 non-life insurers (comprising four government owned insurers and ten from the private sector) collectively representing around 87 per cent of the industry-wide Gross Premium Written (excluding specialised insurers) in FY2017.

With low investment earnings, and higher claims, the profitability indicators of government players have been more deeply impacted than that for select private players, Srinivasan said.

–IANS

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